Antitrust Law Daily Wrap Up, PRIVACY—N.D. Cal.: Third time’s a charm: Android users state valid UCL claim against Google, (Jul 24, 2014)

By Greg Hammond, J.D.

A subclass of Android users that purchased an application through the Android Market and/or Google Play, have stated a sufficient claim against Google under California’s Unfair Competition Law (UCL). “Like Rocky rising from Apollo’s uppercut in the 14th round, Plaintiffs’ complaint has sustained much damage but just manages to stand,” the federal district court in San Jose commented, while partially denying Google’s motion to dismiss (In re Google, Inc. Privacy Policy Litigation, July 21, 2014, Grewal, P.).

Background. Consumers filed a putative class action against Google over two years ago, arising from the technology and advertising company’s change in privacy policy in March 2012. The new unified policy allowed Google to comingle user data across accounts and disclose it to third parties for advertising purposes. One class of Google users and two subclasses—consisting of (1) Android users that switched to a non-Android device after the privacy policy change (Device Switch Subclass) and (2) Android users that purchased an application through the Android market and/or Google Play (Android App Subclass)—emerged. Among the six legal theories set forth by the various consumers were violations of the California Consumers Legal Remedies Act (CLRA) and the UCL.

The first complaint against Google was dismissed in December 2012 for lack of standing, and the first amended complaint was dismissed in December 2013 for the consumers’ failure to state sufficient facts in support of their claims. After a second amended complaint was filed, Google—for a third time—moved to dismiss.

Device Switch Subclass CLRA, UCL claims. The Device Switch Subclass’ CLRA claim alleged that: (1) Google created its 2008 Android privacy policy with the intent to deceive potential Android purchasers into buying them, based on a promise the company would not associate device-related information with a user’s account; (2) Google had a secret plan to alter its privacy policy; and (3) members of the subclass would not have purchased Android devices had Google informed them of its intent to not honor the terms of the 2008 privacy policy. The court dismissed this claim, however, because the subclass failed to demonstrate any facts demonstrating reliance on any alleged misrepresentation.

In addition to its CLRA claim, the Device Switch Subclass’s UCL claim asserted that they were harmed by Google’s unfair, unlawful, and fraudulent business practices. These claims were also dismissed, however, because: (1) the unlawful prong argument was completely based on the dismissed CLRA claim; (2) the fraudulent prong argument failed to allege reliance; and (3) the unfair prong argument failed to allege sufficient facts to show the subclass had a right to privacy under the California Constitution.

Android App Subclass UCL claim. The Android App Subclass seeks recovery under the unfair and fraudulent prongs of the UCL. The unfair prong argument was dismissed quickly, however, as the subclass failed to present any evidence to alter the court’s previous holding that “the benefit to users in receiving free, ‘indispensable services’ offsets much of the harm they may suffer” from Google’s changed privacy policy.

Under the fraudulent prong of the UCL, the subclass was required to plead specific facts showing that members of the public are likely to be deceived by Google’s actions and that the subclass relied on and was harmed by those actions. This claim was the lone survivor of the various CLRA and UCL claims brought against Google. Specifically, the court determined that the Android App Subclass stated a claim for relief under the UCL, because they successfully alleged that: (1) Google’s privacy policy misled consumers into believing that access to their data would be limited to certain groups, when the company knew it would distribute the data outside of those groups; (2) they relied on Google’s policies when making the decision to use Google Play and download Android applications; and (3) they suffered loss of battery power and other system resources as a result of Google’s fraudulent conduct.

The case number is 5:12-cv-01382-PSG.

Attorneys: Diane Zilka (Grant and Eisenhofer) for Robert B. De Mars. Michael Henry Page (Durie Tangri LLP) for Google, Inc.

Companies: Google, Inc.

Cases: Privacy StateUnfairTradePractices CaliforniaNews